What happens when electric utility monopolies pursue their acquisition interests—undisciplined by competition, and insufficiently disciplined by the regulators responsible for replicating competition? Since the mid-1980s, mergers and acquisitions of U.S. electric utilities have halved the number of local, independent utilities. Mostly debt-financed, these transactions have converted retiree-suitable investments into subsidiaries of geographically scattered conglomerates. Written by one of the U.S.’s leading regulatory thinkers, this book combines legal, accounting, economic and financial analysis of the 30-year march of U.S. electricity mergers with insights from the dynamic field of behavioral economics.
1. Diverse strategies, common purpose: Selling public franchises for private gain
2. Missing from utility merger markets: Competitive discipline
3. The structural result: Concentration and complication no one intended
4. Suboptimal couplings cause economic waste
5. Merging parties divert franchise value from the customers who created it
6. Mergers can distort competition: Market power, anticompetitive conduct, and unearned advantage
7. Hierarchical conflict harms customers
8. Regulators' unreadiness: Checklists instead of visions
9. Promoters' strategy: Frame mergers as simple, positive, inevitable
10. How do regulators respond? By ceding leadership, underestimating negatives, and accepting minor positives
11. Explanations: Passion gaps and mental shortcuts
12. Regulatory posture and practice: Less instinct, more analysis; less reactivity, more preparation
13. Regulatory infrastructure: Strengthen regulatory resources, clarify statutory powers, assess mergers' effects